Question
On August 10,2019, Don turned 65 and recieved his first pension payment. Over the years, he had contributed $68,900 to his employer's qualified retirement plan.
On August 10,2019, Don turned 65 and recieved his first pension payment. Over the years, he had contributed $68,900 to his employer's qualified retirement plan. Taxes were paid on $24,700 of this amount. The remaining $44,200 was contributed after the law was changed to permit pre-tax contributions to the plan. Don is to receive monthly benefits of $425 on the same day every month for the remainder of his life.
From the 5 monthly payments, Don receives in 2018, what amount is included in gross income?
- If Don receives 12 payments in 2019, what amount does he include in gross income?
- If Don lives longer than his expected 260 payments, how much of each month’s $425 payment will be included in his gross income?
- How would your answer to Parts a. - c. change if Don were married and his pension benefits were to continue for both his and his wife’s lives? Don’s wife is 61 as on August 10, 2018.
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Cost Management Accounting And Control
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan
6th Edition
324559674, 978-0324559675
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